Record stalk counts push corn production higher

USDA’s projected average U.S. corn yield of 152.8 bushes per acre could fall by a couple of bushels before all is said and done, according to Al Kluis, Northland Commodities, LLC, speaking at a Minneapolis Grain Exchange press briefing on USDA’s Aug. 10 supply and demand estimates.

The higher estimated yield was due to record stalk counts and pushed estimated U.S. corn production to 13.1 billion bushels.

“One thing to keep in mind is the report is based on conditions as of Aug. 1. If the information were gathered today, we would not see the same potential for corn. My projection is for average yields of 149 bushels to 150 bushels.”

Kluis’ projection would drop projected production back to 12.7 billion to 12.8 billion bushels, essentially unchanged from last month.

Projected corn usage is better than expected as USDA increased exports and ethanol use. A lower dollar value is part of the reason for the higher exports, according to Kluis. “We’re probably the cheapest source of wheat and corn in the world. So people will be turning to the United States.”

Corn ending stocks are expected to increase from 1.13 billion bushels for 2006-07 to 1.5 billion bushels for 2007-08.

Despite the huge corn crop, “we’re going to consume it and that certainly is positive,” Kluis said. “So is the fact that global stocks of corn, soybeans and wheat are down from last month, which shows that longer term, we’ll see a lot of competition for acreage and higher prices. But we haven’t seen any price rationing kick in.”

A short-term negative could be the stunning 375-point drop in the Dow on Aug. 9, according to Kluis. “A couple of hedge funds are probably in red ink today (Aug. 10). They are carrying a lot of long ag futures positions and there is a lot of false selling pressure. Long-term prices will bounce back.”

USDA also projected a U.S. soybean yield for this season of 41.5 bushels per acre, which would produce a crop of 2.63 billion bushels. Ending stocks dropped to 575 million bushels for 2006-07 and is forecast to drop again to 220 million bushels in 2007-08.